Bloomberg News

Vanguard Names Buckley Investment Chief as Sauter Retires

June 22, 2012

Vanguard Names Buckley Investment Chief as Sauter Retires (2)

George Sauter, chief investment officer at the Vanguard Group Inc., during the Securities Industry And Financial Markets Association (SIFMA) annual meeting in New York. Photographer: Jin Lee/Bloomberg via Getty Images

Vanguard Group Inc., the biggest U.S. mutual-fund company, said Mortimer J. Buckley will become chief investment officer after George U. Sauter retires at the end of the year.

Buckley, 43, has been a member of Vanguard’s senior staff since 2001 and has run its retail investor group since 2006, the Valley Forge, Pennsylvania-based company said today in a statement. Buckley, known as Tim, joined Vanguard in 1991 as assistant to founder John Bogle.

Sauter, 57, chief investment officer since 2003, oversees the company’s investment-management groups. He has been with Vanguard since 1987. He was named Vanguard’s first investment chief in 2003, assuming oversight of all in-house stock and fixed-income management.

“I have been here 25 years and I have done about as much as I can do,” Sauter said in a telephone interview. Sauter said he has no immediate plans, although he might teach at the university level or go back to school for a master’s degree in mathematics. He has a bachelor’s degree in economics from Dartmouth College and an MBA from the University of Chicago.

Vanguard has $1.8 trillion in U.S. mutual-fund assets and $2.1 trillion in global assets. The firm, which is best known for its index funds, attracted $52 billion in mutual-fund deposits in the first five months of 2012, about three times more than any of its rivals, data from Chicago-based Morningstar Inc. show.

CIO Position

The chief investment officer job at Vanguard doesn’t involve many of the traditional duties the position entails at other firms, said John Woerth, a spokesman for the company. “He doesn’t make market calls or predict the direction of interest rates,” Woerth said in a telephone interview.

The CIO oversees Vanguard’s index funds, which account for about 58 percent of the firm’s mutual-fund assets, and about $600 billion in fixed income that is largely managed internally, Woerth said. Vanguard’s actively managed stock funds are run by 30 outside firms.

Daniel Culloton, a Morningstar analyst, said it wasn’t surprising that Vanguard would pick someone like Buckley as chief investment officer, even though he comes from a managerial background.

“A lot of Vanguard’s top people are managers, rather than investors,” Culloton said in a telephone interview. “It doesn’t seem to have hurt them.”

Buckley has been a member of Vanguard’s investment oversight committee for the past eight years, Woerth said.

Seeking Consistency

“We aren’t looking for aggressive portfolio managers who will take additional risk to post impressive short-term results,” Buckley said in an interview posted today on Vanguard’s website. “Rather, we reward teams for consistent strong performance over the long term.”

Buckley, in the same interview, called the U.S. federal debt his biggest market concern.

“Until we have a clear plan for addressing this debt, we won’t have clarity into other issues, such as economic growth, the job market, inflation and taxes,” he said.

Sauter played a key role in building Vanguard’s business in index funds and exchange-traded funds, according to Daniel Wiener, editor of the New York-based newsletter Independent Adviser for Vanguard Investors.

Dumb Idea

“Jack Bogle came up with the ideas, but Sauter was the guy who executed them,” Wiener said in a telephone interview.

Sauter, in an April interview at Vanguard headquarters, recalled the day when he first suggested to then-Chief Executive Officer John Brennan that the firm should sell ETFs. “He told me it was the dumbest idea I had ever had,” Sauter said. “The next day after he had read my memo he said, ‘It may not be the dumbest idea you’ve ever had.’ ”

Vanguard, which created its first ETF in 2001, had $200 billion in U.S. ETF assets as of May 31, data from Boston-based State Street Corp. (STT:US) show. Vanguard attracted $28 billion to its ETFs this year, more than any other firm.

ETFs typically mimic indexes, while trading throughout the day like stocks.

To contact the reporter on this story: Charles Stein in Boston at cstein4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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